Gilbert v. Unisys Corp., C.A. No. 2023-0513-PAF (Del. Ch. Aug. 13, 2024)
In this decision, the Court of Chancery held that the plaintiffs were entitled to advancement of legal fees and expenses from their former employer. The plaintiffs were former employees hired as Vice Presidents. The plaintiffs argued that because they were officers of the company, they were entitled to advancement under the company’s bylaws. The plaintiffs also claimed that they were entitled to advancement because they served as officers of other entities at the request of the company.
First, the Court found that the plaintiffs were entitled to advancement as officers because they were hired as Vice Presidents, which was a mandatory officer position under bylaws, including Vice Presidents among the list of required corporate officers. The Court explained that a corporation could not escape its advancement obligation by its board of directors’ failure to formally act to elect a Vice President as an officer. Additionally, the Court noted that any ambiguity in the construction of the bylaws should be construed in favor of the party seeking advancement. Second, the Court found that one of the plaintiffs was also entitled to advancement because he served as President of the company’s wholly owned subsidiary, even though the subsidiary’s board, rather than the parent’s board, had elected him. The Court reasoned that the new President’s service was at the request of the parent corporation because the parent had acquired the subsidiary, elected a new board consisting only of the parent’s employees, and appointed another of the parent’s employee (i.e., the plaintiff) President, all in the same day. Finally, the Court held that both plaintiffs also served as officers of another “enterprise” – a business unit within the company – at the request of the company, which again entitled them to advancement. Accordingly, the Court concluded that the plaintiffs were entitled to advancement under the bylaws. Because they were successful in seeking advancement, they were also entitled to recover their legal fees incurred in prosecuting the advancement proceeding.
